Monday, January 9th, 2017
By Gideon Grunfeld
Many service-oriented businesses, including law firms, thrive when they have a steady stream of repeat business. Given that it is generally much more expensive and time consuming to attract a new client than to keep an existing one, it is critical to understand what causes a long-term client to leave for a competitor. In my experience consulting with lawyers, I have rarely come across a law firm that tracks or systematically studies why it lost good clients.
Too often lawyers believe that clients leave for simplistic or unavoidable reasons. The former includes situations in which the partner with the closest connection to the client moves to another firm. The latter includes situations in which the law firm is fired because it achieved a bad result for the client. Since law firms can’t guarantee good results, they view bad results as unavoidable in the long run.
The fact that a certain level of client departures is unavoidable doesn’t justify failing to try to minimize such departures. In fact law firms should study why they lose clients precisely so that they can avoid such departures in the future.
Moreover, studying why good clients leave often shows that a handful of patterns are common but avoidable. For example, when a law firm achieves a bad result for a client, its risk of being fired increases, but plenty of lawyers and law firms have survived a bad client result. Whether the law firm is fired depends on the strength of the pre-existing relationship and how the law firms acts after the bad client result takes place. The better the existing relating the more the firm is inoculated from being fired.
Likewise, the departure of a single lawyer dooms a client relationship only if the law firm has done nothing to establish its own relationship with the client. This is why it is important for the law firm to know more than one person at the client and for more than one lawyer at the law firm to have a relationship with the client.
And some client departures are almost entirely avoidable. Most commonly, these situations involve a lack of responsiveness or attention to detail. For example, it’s the firm that repeatedly fails to comply with a minor client request even when the client repeats it more than once. I’ve seen clients begin to look for the nearest exit when the law firm repeatedly ignored an in-house attorney’s request to avoid morning meetings or repeatedly sent her documents to review at the last minute.
These kinds of errors suggest that the law firm isn’t listening or doesn’t care, and that perception can fester and grow if it’s not addressed immediately. When I was a business litigator at Skadden Arps, I was part of a team that represented a large player in the food services industry. During a client meeting in our offices, we offered some snacks and refreshments that included products made by our client’s competitor. Our client didn’t say anything during the meeting, but we knew that this kind of faux pas could jeopardize a multi-million dollar engagement. To his credit the senior partner in charge of the client relationship apologized profusely and promised it would never happen again. This is the kind of attention to detail that preserves client relationships.
Too many lawyers act as if their job solely involves doing good legal work, but that is only part of what the best lawyers and law firms do. Law is about maintaining strengthening relationships. If you want to maximize the chances of keeping your best clients, study why you lost good clients, and apply those lessons to new and existing client relationships.